UC Davis Agricultural and Resource Economics

Chris Barrett, Cornell University

Altruism, Insurance, And Costly Solidarity Commitments1

Date and Location

Thursday, February 27, 2020, 4:10 PM - 5:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

Abstract. Inter-household transfers play a central role in village economies. Whether
understood as informal insurance, credit, or social taxation, the dominant concep-
tual models used to explain transfers rest on a foundation of self-interested dynamic
behavior. Using experimental data from households in rural Ghana, where we ran-
domized private and publicly observable cash payouts repeated every other month for
a year, we reject two core predictions of the dominant models. We then add impure
altruism and social taxation to a model of limited commitment informal insurance
networks. The data support this new model’s predictions, including that unobserv-
able income shocks may facilitate altruistic giving that better targets less-well-off
individuals within one’s network, and that too large a network can overwhelm even
an altruistic agent, inducing her to cease giving.

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